Informist, Thursday, Nov 23, 2023
By Sony
MUMBAI – Fundraising through certificates of deposit rose today on account of big ticket issuances by HDFC Bank, and Union Bank of India, dealers said. So far today, banks raised 98 bln rupees through CDs, against 86 bln rupees on Wednesday.
HDFC Bank was the major issuer, raising 40 bln rupees through papers maturing in three months at 7.35%. Also, it separately raised 10 bln rupees through papers maturing in March at 7.40%. Union Bank of India raised 10 bln rupees through papers maturing in three months at 7.34%.
On Wednesday, Union Bank was the major issuer of CDs, raising 30 bln rupees through papers maturing in three months at 7.34%.
Meanwhile, traction on the commercial paper side also remained strong, with financial institutions raising 46.9 bln rupees through CPs, against 47 bln rupees on Wednesday.
Aditya Birla Finance was the major issuer of CPs today, raising 15.65 bln rupees through papers maturing in three months at 7.85%. On Wednesday, Reliance Retail Ventures was the major issuer, raising around 36.25 bln rupees through papers maturing in three months at 7.39%.
Meanwhile, rates also rose on the back of a widening liquidity deficit in the banking system. Rates on CDs were up by 3-5 basis points to 7.28-7.50% today from 7.23-7.45% on Wednesday.
“CD rates being up is a factor of (more) issuances,” a dealer with a mid-sized brokerage firm said.
On Wednesday, liquidity in the banking system was in a deficit of 1.77 trln rupees, as against 1.74 trln rupees on Tuesday, according to RBI data. The liquidity deficit on Tuesday was then the highest since at least 2013, before being surpassed by today’s gap. The liquidity deficit in the system marginally widened on account of outflows in the form of goods and services tax, dealers said.
On Wednesday, outflows on account of GST payments of around 110-120 bln rupees took place, dealers said.
Rates on three-month CPs issued by non-banking finance companies rose by 2-3 bps to 7.83-7.93% today from 7.80-7.90% on Wednesday, while those on CPs issued by manufacturing companies remained steady due to lack of supply of these papers, dealers said.
Rates on three-month papers issued by manufacturing companies were quoted at 7.35-7.55%.
According to market participants, rates on CPs rose because the increase in risk weights by the RBI has slightly elevated funding costs for NBFCs and has also increased their capital requirements.
–Primary market
* Sundaram Finance, Bajaj Housing Finance, Tata Capital Housing Finance, Tata Capital Financial Services, Poonawalla Fincorp, and Aditya Birla Finance raised funds through CPs.
* Union Bank of India, HDFC Bank, IDFC First Bank, and Indian Bank raised funds through CDs.
–Secondary market
* Canara Bank’s CD maturing on Friday was dealt thrice at a weighted average yield of 6.8496%.
* Reliance Retail Ventures’s CP maturing on Friday was dealt five times at a weighted average yield of 6.8418%
At 1700 IST, the following were the volumes, in bln rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India’s F-TRAC platform:
End
Edited by Deepshikha Bhardwaj
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